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IOL News
3 days ago
- Business
- IOL News
Mixed reactions to Reserve Bank's 25 basis points interest rate cut
South Africa Reserve Bank (SARB) Governor Lesetja Kganyago announced a 25 basis point cut to the repo rate on Thursday - that was widely expected - bringing it down from 7.50% to 7.25% with some economists welcoming the cut and others criticising its timidity in addressing the nation's pressing economic woes. This decision, made by the Monetary Policy Committee (MPC) offers modest relief to borrowers in an economy grappling with sluggish growth and rising unemployment. The decision to cut rates was unanimous, with one MPC member voting a 0.5% cut. Kganyago said they have now trimmed GDP projections and currently expect growth of 1.2% this year, rising to 1.8% by 2027. 'The outlook for structural reforms remains positive, but there are also headwinds like lower global growth. Given the lower forecast, we assess the risks to growth as balanced. Inflation was below 3% again in April. Core inflation came in at 3%, at the bottom of our target range,' he said. Reza Hendrickse, a portfolio manager at PPS Investments, said the market has been divided regarding a rate cut. "Doves have argued inflationary pressures are subdued and real interest rates in SA are therefore too high. As such, there is ample scope to cut rates to support economic growth, without stoking inflation. Hawks on the other hand have argued that there is limited room for a cut, given rates are close to the SARB's neutral level, and global risks are elevated, posing risk to the rand. In addition, although inflation is well below the 4.5% mid-point level, it is currently in the region of where the SARB would like it to be longer term," Hendrickse said. Dr Roelof Botha, economic Advisor to the Optimum Investment Group, took the hawkish view. 'It should be glaringly obvious that South Africa's most pressing economic problem is not high inflation, but a lack of adequate economic growth and employment creation,' Botha said. He argued that the real prime rate - currently at 8% after accounting for inflation - remains historically high, representing a 156% increase in the real cost of capital compared to the era of former Governor Gill Marcus, when the economy grew at nearly 3% annually. Botha said the MPC might be oblivious to the latest Quarterly Labour Force Survey by Statistics SA, which contained the news of higher unemployment. 'A quarter of a million people lost their jobs during the first quarter of 2025, which will obviously have a negative impact on taxation revenues and aggravate an already alarming fiscal deficit, not to mention the hardship and increased levels of abject poverty amongst households where the bread-winner is now on the street.' Botha pointed out that the current economic climate presents an opportune moment for more aggressive rate cuts, similar to those seen during Marcus's tenure, when the real prime rate averaged 3.1%. 'The MPC seems oblivious to the dire unemployment figures and the fiscal deficit's strain,' he added, warning that the modest cut may fail to stimulate the economy sufficiently. In contrast North West University Business School economist Professor Raymond Parsons took a dovish view and welcomed the rate cut. 'At this stage, even a small reduction in interest rates can have a big positive impact on the national economic mood and on confidence levels. Although it is recognised that monetary policy cannot do the heavy lifting in SA's growth performance, lower borrowing costs are nevertheless supportive of SA's incipient but weak economic recovery,' he said. Parsons pointed out that the reduced growth projections remain indicative of the extent to which the implementation of much-needed structural reforms must be expedited to basically improve SA's growth prospects. Efficient Group Chief Economist Dawie Roodt said while reduction in interest rates was "pretty much expected" that he thought there is room for further reduction in interest rates. "The interesting thing is that the SARB is putting pressure on the Minister of Finance to reduce inflation targets because inflation is below 3% and the SARB would like to see inflation targets at around 3%. I don't think it would cost the Minister much to reduce inflation targets as inflation is below 3%. We should expect another interest rate cut in July or September,' he said. Frank Blackmore, the lead economist at KPMG, said that the reason for the rate cut was the low inflation rate. 'The Reserve Bank remains data dependent in that respect, as well as the easing of some of the risks such as the exchange rate. Probably another interesting scenario where they're reducing the target rate from a current, 4.5 % objective so the midpoint of the three to 6% range to the 3% objective so the bottom of their three to 6% range.' BUSINESS REPORT Visit:
The Star
7 days ago
- Business
- The Star
ActionSA writes to President Ramaphosa demanding dismissal of employment minister
ActionSA has written to President Ramaphosa, requesting that he dismiss the Minister of Employment and Labour, Nomakhosazana Meth, for her clear failure to arrest the deepening unemployment crisis that continues to erode hope, dignity and opportunity for millions of South Africans. The latest Quarterly Labour Force Survey (QLFS), Q1:2025, paints a dire picture: The official unemployment rate rose to 32.9%, up from 31.9% the previous quarter. A staggering 8.2 million South Africans are now unemployed, with an additional 3.5 million discouraged work-seekers. 291 000 jobs were lost in the first quarter alone – the first such Q1 contraction since 2021. This equates to more than 24,000 jobs lost each week, and almost 5 000 each workday. The proportion of young South Africans aged 15–34 who are not in employment, education, or training (NEET) rose to 45.1% in Q1:2025 — a devastating indicator that nearly half of our youth have been left without opportunity, support or a path to a better future. There is a glaring absence of any meaningful strategy, either in planning or implementation and despite full awareness of South Africa's worsening unemployment crisis, Minister Meth has failed to present a coherent plan to stem job losses, support the informal economy or tackle the systemic barriers that keep young people out of the workforce. In November 2024, ActionSA asked Minister Meth whether she would resign should the country's distressing unemployment figures continue to rise. Her response was blunt and unapologetic: 'Unfortunately, I won't resign.' This laid bare a disturbing indifference to the suffering of millions of South Africans. It is an attitude that reflects the posture of an uncaring government that has grown comfortable with failure while ordinary citizens pay the price. Nearly a year into her tenure, Minister Meth has not demonstrated the urgency, capacity or leadership required to respond to this economic and social emergency. South Africa's working-age population cannot afford further stagnation under ineffective stewardship. The absence of meaningful performance management for GNU Ministers has created a culture where failure carries zero consequence. In any functional democracy, such dismal figures amid worsening socio-economic conditions would compel a Minister to take responsibility and step down. Sadly, this standard of accountability is sorely lacking in South Africa and glaringly absent in the Ramaphosa-led administrations. ActionSA believes that something has to give. Sitting on our hands while millions suffer is simply not an option. We are committed to using every available lever to ensure that South Africa's unemployment crisis is addressed with the urgency it demands. Alan Beesley MP, ActionSA Member of Parliament
Eyewitness News
7 days ago
- Politics
- Eyewitness News
ActionSA calls on Ramaphosa to fire Labour Minister Meth over worsening unemployment rate
CAPE TOWN - ActionSA has called on President Cyril Ramaphosa to fire Labour and Employment Minister Makhosazana Meth for the worsening unemployment rate. The party's Alan Beesley said that the party had written to Ramaphosa asking him to take action against Meth, saying that the latest Quarterly Labour Force Survey painted a dire picture. The latest numbers show how official unemployment has increased from 31.9% in the previous quarter to 32.9%, with 8.2 million South Africans unemployed. "Nearly one in every second youth is unemployed. Based on the latest quarterly numbers, 24,000 jobs are being lost a week, nearly 5,000 a day. There's clearly no strategy or accountability to turn around this unemployment crisis. The start of accountability is to remove Minister Meth."
IOL News
23-05-2025
- Business
- IOL News
Ignoring youth unemployment in South Africa is a dangerous gamble
Some 10 million South Africans face the highest barriers to entering the workforce, with unemployment figures significantly outpacing that of older youth. Image: Henk Kruger Approximately 10 million South Africans aged 15 to 24 face the highest barriers to entering the workforce, with unemployment figures significantly outpacing those of older youth, resulting in dire consequences for the country's economic growth. 'For many young South Africans, landing a job is more than just a milestone, it is a crucial step toward economic independence and inclusion. Yet for millions, this first step remains out of reach,' Statistics South Africa said in a data print released this week. Veteran business commentator, Adrian Schofield, said that the 'growth in the proportion of unemployed young people is a direct obstacle to growth in the country's economy'. He added that this sort of situation led to more crime, which would also dissuade investment. Recent research by Statistics South Africa, which further breaks down its Quarterly Labour Force Survey released on Tuesday, showed that half of all those between 15 and 24 were unemployed in 2015. Ten years later, and this number has jumped to 62.4%. Video Player is loading. Play Video Play Unmute Current Time 0:00 / Duration -:- Loaded : 0% Stream Type LIVE Seek to live, currently behind live LIVE Remaining Time - 0:00 This is a modal window. Beginning of dialog window. Escape will cancel and close the window. Text Color White Black Red Green Blue Yellow Magenta Cyan Transparency Opaque Semi-Transparent Background Color Black White Red Green Blue Yellow Magenta Cyan Transparency Opaque Semi-Transparent Transparent Window Color Black White Red Green Blue Yellow Magenta Cyan Transparency Transparent Semi-Transparent Opaque Font Size 50% 75% 100% 125% 150% 175% 200% 300% 400% Text Edge Style None Raised Depressed Uniform Dropshadow Font Family Proportional Sans-Serif Monospace Sans-Serif Proportional Serif Monospace Serif Casual Script Small Caps Reset restore all settings to the default values Done Close Modal Dialog End of dialog window. Advertisement Next Stay Close ✕ South Africans can legally start working at 15 years of age. For all youngsters aged 25 to 34, the rate increased from 31.4% to 40.4% over the same period, the agency said. In 2015, the unemployment rate for youth aged 15 to 34 was 36.9%. A decade later, it had jumped 9.2 percentage points, which Statistics South Africa said is an 'increase that highlights deteriorating prospects for millions'. Schofield added that the 'gross lack of attention to technical, engineering and maths skills in the education pipeline condemns the majority of matriculants to low-skilled or service occupations (with low incomes), if they can find any employment'. Where youth do have jobs, these are generally in areas such as retail, wholesale, and hospitality, which accounts for a quarter of those with jobs, said Statistics South Africa. 'These numbers paint a clear picture: many young workers are clustered in low-skilled, or service-based occupations,' it said. Of those who were unemployed, almost 60% have no previous work experience, said Statistics South Africa. 'That means nearly six in ten unemployed young people are still waiting for their first opportunity to enter the job market. Without experience, youth struggle to get hired – yet without being hired, they cannot gain experience,' said Statistics South Africa. It added that 'this cycle of exclusion continues to fuel long-term unemployment and stalls skills development at a critical stage of life'. The unemployment rate also reflects entrenched gender inequalities, with women continuing to face greater barriers to employment, particularly among the youth. Some 37.5% of women between 15 and 24 are in the category StatsSA calls Not in Employment, Education or Training. This disparity is worse in the 15 to 34 age group, at 45.1% overall – women at 48.1% compared with 42.2% of men. This, Statistics South Africa said, highlights 'a persistent gender gap in access to work and skills development'. The agency said: 'The challenges facing young South Africans in the employment space are not new, but they are trending negatively in many cases. Over the past ten years, youth unemployment has remained persistently high,' said StatsSA. By comparison, the overall unemployment rate is 32.9%, up from the last three months of 2024 when it was 31.9%. Including discouraged job seekers, a more accurate measure of the job situation, the rate went from 41.9% to 43.1% over the same quarter-on-quarter analysis, StatsSA said. The plight of the youth is more dire in the North West and the Eastern Cape provinces, where it deepens into economic exclusion. The first quarter of 2025 saw North West record a youth unemployment rate of 58.8%. Cape Argus
The Citizen
23-05-2025
- Business
- The Citizen
Fat cats criticised as Limpopo government agency tries to cut 100 jobs
Voluntary separation packages were offered to employees after the Limpopo Economic Development Agency was told it will no longer receive state funding. The Limpopo Economic Development Agency (LEDA), a struggling parastatal under the Limpopo provincial government, has offered employees a voluntary separation package initiative aimed at reducing overhead costs. The move affects nearly 100 employees. Voluntary separation package offered to LEDA employees This week, LEDA's outgoing group CEO Thakhani Makhuvha confirmed the move, stating that the separation package is being offered to employees between the ages of 55 and 64. He emphasised that no employee will be forced to accept the offer. Limpopo lost a staggering 55 000 jobs from the fourth quarter of 2024 to the first quarter of 2025 – that's close to 20% of the jobs lost nationally. This is according to the latest Quarterly Labour Force Survey report for the first quarter of 2025 released by Stats SA. The province's expanded unemployment rate — at an astounding 48.6% — is the third highest in the country. ALSO READ: Outrage over Limpopo council's R3 million Warmbaths conference Responding to The Citizen's inquiry, Makhuvha explained that the decision comes after a directive from the Limpopo legislature. The directive stipulates that so-called '3D' entities in the province — including LEDA and Gateway Airports Authority Limited (GAAL) — will no longer receive state funding and must become self-sustainable by 2030. Makhuvha said the VSP initiative affects approximately 100 employees. 'This is voluntary and employees are not being forced to participate,' he reiterated. Notification was insufficient and abrupt However, this has sparked concern among staff. Several affected employees reportedly received notifications via email and were given only three days to make a decision, which some viewed as insufficient and abrupt. The voluntary separation initiative has been perceived by many as the beginning of a broader retrenchment process. They said LEDA continues to face operational and financial challenges under its current leadership. Recently, employees of one of LEDA's subsidiaries, Limpopo Connexion, were reportedly paid late due to financial constraints. A union representative in LEDA speaking on condition of anonymity described the situation as a crisis requiring urgent intervention from the provincial government. 'We are led by blind men and women, people with no vision for the future of this company and its workers,' the representative said. Union takes aim at high-paid executives The union also criticised the exclusion of executives from the voluntary separation process, claiming that some executives over the age of 55 remain unaffected. Makhuvha clarified that executives are employed on fixed five-year contracts and are therefore not eligible for voluntary separation. 'These are the very people deciding our futures — the same ones who are failing to manage and rescue the agency,' the union member said. ALSO READ: Limpopo mayor advised to make many babies at grand wedding They further alleged that some affected employees were only consulted after receiving the letters through a virtual process led by Makhuvha. 'How do you consult people after the fact?' the member asked. Despite LEDA's financial woes, the agency reportedly continues to hire high-earning executives — some allegedly transferred from provincial government departments without undergoing formal interview processes. According to LEDA's 2023/24 annual report, no executive earns less than R2.5 million per year, with the group CEO earning R4.5 million annually. LEDA and its six subsidiaries have long been under scrutiny, particularly since the merger of four entities — LimDev, LIBSA, Trade Investment Limpopo and Limpopo Agricultural Development Corporation (LADC) — to form the agency. Attempts to get comment from economic development MEC Tshitereke Matibe's office hit a brick wall. Departmental spokesperson Zaid Kala declined to comment, referring all media queries back to LEDA.
